We all probably knew that on Wall Street, the “virtue is its own reward” school of thought doesn’t have a lot of adherents. A speech Attorney General Eric Holder is expected to deliver this afternoon proves that at the highest levels of the financial world even “virtue plus a $1.6 million payout from the feds is its own reward” doesn’t have much of a following.
The Wall Street Journal and others are reporting that Holder will call on Congress to make it possible for insiders who expose corporate wrongdoing under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) to be paid more than the current $1.6 million dollar limit on whistleblower compensation.
Why? Apparently in the Justice Department’s experience, people in a position to blow the whistle on wrongdoing on Wall Street already make so much money that dangling $1.6 million in front of them simply isn’t enough incentive to get them to do the right thing.
Holder is expected to ask Congress to consider changes that would make whistleblowers who expose violations that are prosecutable under FIRREA eligible for a share of the fines corporations pay when they settle or are found guilty.
According to excerpts from the speech obtained by the Journal, Holder is expected to say larger rewards "could significantly improve the Justice Department's ability to gather evidence of wrongdoing while complex financial crimes are still in progress — making it easier to complete investigations and to stop misconduct before it becomes so widespread that it foments the next crisis.”
A similar system is in place for compensating individuals who bring so-called qui tam cases against government contractors under the False Claims Act. Under that law, individual citizens bringing a suit can be eligible for as much as 25 percent of what the government recovers. In the case of suits against Wall Street firms and big banks – where settlements have been known to run into the tens of billions of dollars – that could change the math dramatically for potential informants.
It could change it so dramatically, in fact, that the proposal will likely generate some resistance in Congress among lawmakers concerned that the promise of multi-million dollar payouts could produce a wave of baseless suits by individuals hoping for easy money.
Holder is also expected to seek funding for more personnel to investigate and prosecute financial crime.
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